04.01.2023

Based on data from the monthly reports on the cash performance of the budgets of first-level spending units, the budget balance of the Consolidated Fiscal Programme (CFP) on a cash basis as of November 2022 is negative, amounting to BGN 398.0 million (0.2 % of forecast GDP) and is formed by a deficit under the national budget of BGN 857.5 million and an excess of revenues over expenditures under EU funds of BGN 459.5 million.

As of November 2022, CFP revenues, grants and donations are to the amount of BGN 56,465.5 million, or 94.6 % of the revised annual estimates^[1] to the 2022 State Budget of the Republic of Bulgaria Law. However, it should be borne in mind that, pursuant to §23 and §24 of the Transitional and Final Provisions of the 2022 State Budget of the Republic of Bulgaria Law, in the second half of the year there were inflows of revenues to, and respectively outflows of expenditures from, the budget of the Electricity System Security Fund which are of an extraordinary one-off nature and have not been laid down in the estimates to the 2022 State Budget of the Republic of Bulgaria Law. In accordance with the above provisions, each month (in the period July – December) the budget of the Electricity System Security Fund recorded revenues from targeted contributions by enterprises with 100 percent state participation in the capital from the “Energy” sector, which were used to cover expenditures for compensation of end non-domestic consumers of electricity; that compensation amounted to 100 percent of the difference between the real average monthly exchange price on the “day ahead market” of the Independent Bulgarian Energy Exchange EAD for the relevant month and the base price of 250 BGN/MWh. In the period July – November, the extraordinary one-off revenues from targeted contributions amounted to approximately BGN 3 billion. If the impact of the above mentioned extraordinary one-off revenues is eliminated, as of November the performance of CFP revenues and grants is 89.7 % of the one laid down in the estimates to the 2022 State Budget of the Republic of Bulgaria Law, with the growth compared to the same period of 2021 being BGN 5,710.3 million, or 12.0 %.

Compared to the same period of the previous year, tax and social security revenues under CFP have risen in nominal terms by BGN 5.4 billion or 14.5 %, non-tax revenues – by BGN 3.7 billion (if the impact of the extraordinary one-off revenues to the budget of the Electricity System Security Fund is eliminated, non-tax revenues have increased in nominal terms by BGN 0.7 billion or 10.1 %), while the proceeds in the part of grants and donations (mainly grants under EU programmes and funds) are by BGN 0.4 billion lower (a 14.1 % reduction compared to the same period of 2021).

Tax proceeds under CFP, including revenues from social security and health insurance contributions, total BGN 42,742.6 million, which is 92.7 % of the annual plans. Proceeds from taxes and social security and health insurance contributions form 75.7 % of total CFP proceeds for the period. Revenues from direct taxes amount to BGN 9,265.3 million, or 102.4 % compared to the annual estimates. Indirect tax revenues amount to BGN 19,664.3 million (88.3 % of the annual estimates), with VAT revenues amounting to BGN 13,977.9 million (87,3 % of the plans), excise duty revenues – to BGN 5,220.1 million (89.7 % of the estimates), and customs duty revenues – to BGN 414.3 million (109.0 % compared to the annual estimates). Proceeds from other taxes, including property taxes and other taxes under the Corporate Income Tax Law, amount to BGN 1,409.9 million, or 100.6 % performance of the annual estimates. Revenues from social security and health insurance contributions are BGN 12,403.1 million, or 92.6 % of those planned for the year.

The analysis of the data for November should take into account the fact that significant corporate tax revenues are received during the month which is related to the deadline for making the corporate tax prepayments in 2022. The proceeds from this tax for the month are almost BGN 1.7 billion, which, respectively, has a positive impact on the revenues to the budget for the month. The good performance of corporate tax proceeds also indicates a possible overcompensation of certain business sectors, mainly due to the wide scope of the measures for electricity consumers outside the regulated market. Many companies have already shifted the burden of the high energy prices to final customers and households, and the lack of focus in compensation measures has led to distortion of their financial results and generation of significant profits. As a result of the implemented tax measures for a lower and a zero VAT rate for the supplies of certain goods and services, as well as the regular refunding of VAT, the expectations are for an underperformance of the planned VAT revenues for 2022. On the other hand, expenditure growth outpaces revenue growth, mainly due to higher expenditures on subsidies, social payments, capital expenditures, etc.

Non-tax revenues amount to BGN 11,067.7 million (including BGN 2,976.0 million one-off revenues from targeted contributions to the budget of the Electricity System Security Fund) and are mostly formed by revenues from state, municipal and legal fees, revenues from rents, including contributions from revenues from state and municipal enterprises, concession revenues, greenhouse gas emission allowance revenues, etc.

Proceeds from grants and donations amount to BGN 2,655.3 million.

The expenditures under the CFP, including the contribution of the Republic of Bulgaria to the EU budget, amount to BGN 56,863.6 million as of November 2022, which is 86.3 % of the annual estimates. For comparison, the expenditures under the CFP as of November 2021 amounted to BGN 47,140.5 million. When making comparison with the annual estimates to the 2022 State Budget of the Republic of Bulgaria Law and in view of the comparability of data, one should eliminate the impact of the expenditures under the budget of the Electricity System Security Fund made in execution of §23 of the Transitional and Final Provisions of the 2022 State Budget of the Republic of Bulgaria Law for payment of compensations to consumers of electricity outside the regulated market, which are of an extraordinary one-off nature and have not been laid down in the estimates to the 2022 State Budget of the Republic of Bulgaria Law. For this reason, when making comparison with the estimates for the year, similarly to revenues one should eliminate the impact of the expenditures made in execution of §23 of the Transitional and Final Provisions of the 2022 State Budget of the Republic of Bulgaria Law. Thus, as of November, CFP expenditures on a comparable basis are 81.5 % of the estimates to the 2022 State Budget of the Republic of Bulgaria Law.

A major driver to the increase in expenditures are the programmes for payment of compensations to non-domestic electricity consumers due to the high electricity prices. Considered by economic elements, the most significant increase is reported in the expenditures on subsidies which include, in addition to the traditional expenditures on subsidies to non-financial enterprises in 2022, the expenditures under the programmes to the budget of the Electricity System Security Fund. Social and health insurance expenditures also reported significant growth, mainly in the part of expenditures on pensions. Another element of the expenditures, which reported a significant increase compared to the same period of the previous year, are the maintenance expenditures, where the main driver are the liabilities from previous years paid to road construction and maintenance companies under contracts for ongoing repair and maintenance. Capital, staff and interest expenditure also recorded a nominal increase compared to November 2021.

As of November 2022, non-interest expenditures amount to BGN 54,573.7 million, which is 86.5% of the annual plan. Non-interest current expenditures amount to BGN 50,508.7 million. Capital expenditures (including net increment of state reserve) amount to BGN 4,032.1 million. The current and capital transfers to other countries amount to BGN 32.9 million. Interest payments amount to BGN 612.1 million, or 92.1 % of those planned for 2022.

The part of Republic of Bulgaria's contribution to the EU budget, paid from the central budget as of 30 November 2022, amounts to BGN 1,677.7 million, which complies with the current legislation in the area of EU own resources.

Fiscal reserve as of 30.11.2021 is BGN 12.8 billion, including BGN 12.6 billion fiscal reserve deposits in BNB and banks and BGN 0.2 billion receivables under the EU Funds for certified expenditure, advance payments, etc.

The Consolidated Fiscal Programme performance data as of 30 November 2022 are published on the website of the Ministry of Finance in Statistics section. The statistical data are accompanied by an Information Bulletin on the Execution of the State Budget and the main indicators of the consolidated fiscal programme, which presents a short analysis of the performance of the key budget parameters on a consolidated level and by constituent budgets.

^[1] Estimates to the 2022 State Budget of the Republic of Bulgaria Law (prom., SG No 18 of 04.03.2022; amended and supplemented, SG No 52 of 05.07.2022).